Fonterra kicks off $144m partnership with Dutch cheese maker

Fonterra Co-operative Group [NZX: FCG], the world's largest dairy exporter, has commissioned a new dairy ingredients plant in Heerenveen, in the north of the Netherlands, its first wholly-owned and operated ingredients plant in Europe.

Under a partnership signed two years ago, Dutch Cheese manufacturer A-ware Food Group has built and will operate an adjacent cheese plant while Fonterra will operate the dairy ingredients plant. It's the biggest sourcing deal the cooperative has signed in Europe, though it has a number of others including with British dairy processor First Milk and Lithuanian processor, Rokiskio.

Whey and lactose, byproducts of the cheese production on the Dutch site, will be processed into high-value paediatric, maternal, and sports nutrition products to supply Fonterra customers in Europe and Asia.

Fonterra won't reveal the plant cost but has previously referred to a $144 million partnership with A-ware.

The plant is part of the co-operative's fully integrated global supply chain from the farm gate direct to global consumers, using Fonterra's milk pools and manufacturing sites in New Zealand, Australia, and Europe, Fonterra CEO Theo Spierings said in a company statement today.

"Fonterra has substantial intellectual property in the manufacture of functional whey protein ingredients and had been looking for some time for a source of high quality whey to enable us to commercialise these innovations.

"Our partnership with A-ware Food Group fits well with our strategic priorities aimed at increasing the volume and value of our ingredients and branded products," he said.

The plant, which will operate around the clock 365 days a year, will produce 5,000 metric tonnes of whey protein and 25,000 metric tonnes of lactose annually. Fonterra imports lactose from the US and Europe but won't say what percentage of those imports the Dutch site will account for.

In 2013 Fonterra Europe launched a range of whey protein ingredients sourced exclusively in Europe under the brand name europro.

The whey protein concentrates are used in a variety of applications such as enhanced protein yoghurts, beverages and bars for the healthy ageing, nutritional supplements and 'super foods' for use in medical nutrition where people can't digest normal food, baby formula and follow-on formula, and sports beverages and bars.

(BusinessDesk)